Banking in South Africa as a Foreign-Owned Business: What You Need to Know

Opening a business bank account in South Africa as a foreign-owned business is more complex than for locally-owned businesses. The combination of FICA requirements, SARB exchange control regulations, and enhanced due diligence for foreign-owned entities means the process requires careful preparation.

The Regulatory Context

South Africa's banking regulations require banks to conduct enhanced due diligence on foreign-owned businesses. This is driven by:

• FICA requirements for beneficial ownership verification
• SARB exchange control regulations governing capital flows
• South Africa's FATF greylisting (since February 2023), which has resulted in more stringent KYC requirements across all banks

This does not mean it is impossible to open a business account as a foreign-owned business — it means the process takes longer and requires more documentation.

What Qualifies as a "Foreign-Owned Business"?

For banking purposes, a business is considered foreign-owned if:

• One or more directors are non-South African residents
• One or more shareholders (owning 25% or more) are non-South African residents
• The business is a subsidiary of a foreign company

Each of these scenarios triggers additional documentation requirements.

Documents Required for Foreign-Owned Businesses

In addition to the standard FICA documents required for all businesses, foreign-owned businesses typically need:

For foreign directors:

• Certified copy of passport (certified by a notary or South African commissioner of oaths)
• Proof of residential address in the home country (translated into English if necessary)
• Proof of legal right to work or reside in South Africa (if applicable)
• Tax identification number from the home country

For foreign shareholders:

• Same as foreign directors
• Corporate structure chart showing the full ownership chain
• Certificate of incorporation for any foreign holding companies
• Proof of beneficial ownership for the ultimate holding company

For subsidiaries of foreign companies:

• Certificate of incorporation of the parent company
• Board resolution from the parent company authorising the South African subsidiary to open a bank account
• Apostille or notarised certification of all foreign documents

Which Banks Are Most Accessible for Foreign-Owned Businesses?

Not all South African banks are equally accessible to foreign-owned businesses. Based on general market experience:

Standard Bank is often the most accessible for foreign-owned businesses, particularly for businesses from other African countries. Its pan-African presence means it has established processes for dealing with foreign ownership structures.

Absa has a dedicated international business banking team and is generally responsive to foreign-owned business applications.

FNB is more conservative with foreign-owned businesses and may require additional documentation or a longer review period.

Nedbank and Capitec are less experienced with complex foreign ownership structures and may be more likely to decline applications.

The SARB Exchange Control Implications

South Africa has exchange control regulations that govern how money moves in and out of the country. For foreign-owned businesses, this has practical implications:

Dividends to foreign shareholders: Dividends paid to non-resident shareholders are subject to a 20% withholding tax (reduced by tax treaties with certain countries). The payment must be reported to SARB.

Loans from foreign shareholders: If a foreign shareholder lends money to the South African business, this must be reported to SARB as a foreign loan. Interest payments are subject to withholding tax.

Capital repatriation: If a foreign investor wants to repatriate capital from South Africa, this requires SARB approval and proof that the original investment was properly declared.

Work with a South African tax advisor who specialises in exchange control before structuring your investment.

Practical Tips for Foreign-Owned Businesses

Appoint a South African director. Having at least one South African resident director significantly simplifies the banking process. The South African director can act as the primary contact for the bank and can provide local FICA documents.

Use an attorney or accountant to prepare your application. The complexity of foreign ownership documentation makes professional assistance worthwhile. A South African attorney or accountant who specialises in company formation can prepare a complete application package that minimises back-and-forth with the bank.

Budget extra time. Foreign-owned business applications typically take four to eight weeks to process, compared to two to four weeks for locally-owned businesses. Some banks require internal compliance committee approval for foreign-owned businesses.

Consider a fintech alternative for initial operations. While waiting for your bank account to be approved, services like Wise Business can allow you to receive and make payments. This is not a substitute for a South African bank account, but it can keep your business operational during the application process.

The Bottom Line

Banking in South Africa as a foreign-owned business is achievable, but it requires more preparation and patience than for locally-owned businesses. The key is to prepare a complete, professionally assembled application package and to choose a bank with experience in foreign-owned business accounts.

Standard Bank and Absa are the most accessible starting points. Engage a South African attorney or accountant to help with the application, and budget six to eight weeks for the process.